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F.A.O midnightcatprowl

Startups, marketing and more
JustLetOneOff
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F.A.O midnightcatprowl

#24252

Postby JustLetOneOff » January 18th, 2017, 8:42 pm

I saw in your reply about paying in coins to the bank that you have recently closed your shop. I have always had a desire to open a shop. Probably based on completely flawed reasons and unreasonable expectations. As a driving instructor I am regularly driving up and down the same high streets most days. Unfortunately I see so many small shops close down and wonder how any could survive. Parking in high streets is terrible. Commercial rents seem high and the likes of Tesco and Amazon must put huge pressure on independent retailers. Would you mind sharing your experiences of owning a shop? Would you recommend it to others?

Thanks in advance.
JLOO
Moderator Message:
Moved from DAK as this forum is more suitable, Chris.

poundcoin
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Re: F.A.O midnightcatprowl

#24555

Postby poundcoin » January 19th, 2017, 9:23 pm

Sorry to jump in before Lynn replies but I worked in retail from school up to management for ASDA (before anyone , apart from those in the North had heard of them ! ).

In fact my dad built ( with help!) the first ever out of town superstore in the UK , later to become an ASDA , which is how I got into retail .

Later I was a non-food buyer for a couple of regional Co-Ops. After that 30 plus years self employed with a small discount store in the West Country , plus for a short 3 year period , a "Body Shop-style" store in Oxford Street ,London .
When you are busy it's fine but when things go against you , amazing how quickly things can slide .

Have been retired for nearly 6 years mainly because trade just dropped off but I do miss certain aspects of it .

What I am trying to say is that even with my experience , I cannot think of any type of product that I could retail in a bricks and mortar shop these days and hope to make a worthwhile profit .
Even if you do find a successful niche , it's not long before someone else opens up in opposition !
Nearly every small shop in our area (OK we are in the sticks) seem to be devoid of customers these days so if you have no retail experience I would seriously consider sticking to what you know .
Maybe Lynn will be more encouraging ?

didds
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Re: F.A.O midnightcatprowl

#24659

Postby didds » January 20th, 2017, 10:48 am

This is purely a man in the street's thoughts... Ive never run a shop, and the nearest Ive come to retail is shelf stacking in a S/M. I do have friends that have run independent shops.


I live in a small market town - 2011 census says 12000 population, community population of 32000.

We have 4 supermarkets of varying sizes plus a poundland. Two other s/market chains have closed their stores within the last few years.

We are blessed over all with a lot of independent businesses, but while some have been a round for several years, equally I see many startups fold in due course, often only months. Social media debates about this situation abound but generally revolve around the central points of

* there's nowhere to buy X/Y/Z
* stores for X/Y/Z have been tried and failed in the last few years.
* why doesn't Argos/Primark/new supermarket come to town
* Argos/Primark/new supermarket already have a store within 15 miles of us, in towns with significantly higher populations
* people want everything available at the very rock bottom prices and expect independents to compete with the likes of Tesco
* outlying villages have minimal outlets, some are "only" community shops
* the web provides plethora of choice with minimal pricing for anything that can be waited just a few days for.

From what I see, independent stores in small towns like us can succeed but only frankly in niche areas. You cannot compete with the big boys or meet the expectations of those that will always compare you to them.

shops in smaller towns ( think of a couple of large villages/small towns near-ish) only support immediate requirements - a mini mart open all hours, decent butchers, maybe a coffee shop/takeaway. If that.

shops in large towns have to compete with all the big names.

In short I think I am saying that from a layman's perspective to open a independent store you really REALLY have to know your market, be niche enough that you can attract custom unaffected by mainstream and web retail, and be able to not be compared with Tesco for pricing etc.

Factor into your business plan the impact of business rates increasing after a year, how you will pay your contacted rent on premises if the business folds, and if you are not VAT registered (unlikely?) to start with, the impact on your business when it grows and all of a sudden prices effectively go up 20% or you have to take that hit.

Though this thread is about shops, I'd say the same thing about services.

didds

midnightcatprowl
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Re: F.A.O midnightcatprowl

#27139

Postby midnightcatprowl » January 29th, 2017, 12:04 pm

I pretty much agree with the points made by Poundcoin (when Poundcoin was still trading I used to follow his posts obsessively on The Fool) and Didds. BUT the fact remains that people still do start, successfully grow and expand new retail businesses and manage to live comfortably off the proceeds. Unfortunately the fact also remains that most new shops probably fail or at best stagger along with the owner living on less than minimum wage while working unbelievably long hours.

You've already analysed many of the problems for yourself such as partially empty High Streets and lack of parking/expense of parking. Poundcoin has pointed to the issue of business rates, you never know how these will change but you are stuck with the change because you are tied in to a lengthy contract with your landlord. Retail property contracts are a very complex issue, in response to the crisis in small retail the length of contracts is tending to come down but this is a two edged sword. On the one hand a shorter contract with a 'get out' clause at x number of years sounds great if you say it fast but could potentially be a nightmare if, in fact, your business is doing well and you come to the end of the short contract and your landlord wants to massively raise the rent or simply wants you out perhaps to change the property to residential use instead. You won't necessarily find the replacement property you want nearby and such are the oddities of retail that even a shop which is doing well in one position may simply die if it moves a couple of doors along (I sadly watched this happen to another retail business while I was trading).

People with a lot of experience of successful small retail will tend to tell you that when opening a shop you need enough money on hand for all the expense involved in that + enough to live on for at least two years before expecting the business to start supplying you with any income. Very few people going into retail are in this position and very few actually understand the huge range of expenses involved in running a business nor do they realise just exactly how much they'd have to sell even to cover those expenses and that is before you start to make any sort of a profit.

Knowledge and training of the shop owner? Today probably most small shop owners have no experience or training in the role. I didn't beyond some shop floor retail experience when I was at school and university in the 1960s and I can't honestly say that working as a Saturday girl in British Home Stores while at school and in the shoe department of a distinctly dull independent department store in the summer before going to university was enlightening.

Most people simply don't realise the wide range of skills and knowledge required to run a successful retail business nor that the skills and knowledge required are endlessly expanding. You may have worked out that you are going to have to be a successful window dresser, graphic artist and bookkeeper and let's hope you are good at cleaning too, an excellent organiser and have the same skills in choosing the right stock as would be provided by a whole department full of staff in a large retail organisation. Cash registers and EPOS systems don't just 'work' YOU have to programme them - generally following an instruction booklet which appears to have been translated through five different languages before it reached you. Don't forget you will need an extensive knowledge of the law as relating to retail and to employment if you have staff. You need to know about Data Protection, Health and Safety, Hygiene. There's little future today for shops which don't have their own website and you'll at least have to maintain yours if you don't create it from scratch and most small retail businesses can't afford to pay a web designer. Maintaining your web store will also involve making decent photos of your stock and you'll need the photos anyway plus action shots in the shop for the business Facebook Page and Twitter feed and Instagram or Pinterest account which your customers will confidently expect to check before deciding if it is worth a trip to your store. You need to be good at managing staff, good at relating to customers, ready to deal with shoplifters (which can be very frightening when they come in gangs and don't believe for a moment that even the 'nicest' area doesn't have highly skilled shoplifters among the residents). Card machines and the merchant accounts and security measures which go with them are a pit for the unwary. Remember also that you should be qualified in first aid, able to deal calmly with customers having heart attacks or sliding into diabetic comas and you should have good counselling skills for helping the many sad, lonely and distressed people who go into shops because it is the only place they can find someone to talk to. In between don't forget to fill up the shelves and work out how to advertise the business and don't forget to post some leaflets through doors on your way home when you finally get to go home.

Am I over-exaggerating? No actually I've only mentioned a few of the demands. Personally I loved retail and found it immensely interesting but after 20 years I was subsidising my shop rather than it subsidising me and I had to give up. I'm still sad about it! But it is immensely difficult today - not impossible but difficult - to make a shop pay. People have access to so many ways of spending their money and obtaining the goods they want and they no longer have regular shopping styles. Beware also of assuming that some of the apparently happy shopkeepers you see are actually doing okay, some people run shops as a sort of lifestyle choice, maybe as a 'young retired' thing, maybe for a desired second income but that income not being critical if there is another reliable income earner in the family. A friend (a headteacher) whose husband ran a small business (not a shop) said cynically to me long ago. "You'll notice that so many of these small business people are married to someone who is a doctor, teacher, local government employee etc i.e. married to someone with a regular income and good pension prospects". She described her own financial position as "Well of course I pay the mortgage and all the regular household bills - when my husband's business is doing well it pays for some of the really nice things we've had, that holiday, the small riverboat, the theatre trip, the expensive meal out. When trade isn't so good then we still get by because I earn enough to support us both." Also some shops get by because a large family circle are providing free labour in their spare time. You need to be very very careful indeed about embarking on running a shop if you are the main source of funds and labour + you are going to be dependent on the shop steadily making enough profit to pay the mortgage or rent on your home and put food on the family table and pay for the school uniforms and so on.

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Re: F.A.O midnightcatprowl

#27178

Postby poundcoin » January 29th, 2017, 2:50 pm

Excellent reply , (and did wonder if you had seen the message) though it may be wasted as the original poster JLOO hasn't replied from 10 days ago .
Maybe the switch of the message from DAK board lost him in the ether .

JustLetOneOff
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Re: F.A.O midnightcatprowl

#27226

Postby JustLetOneOff » January 29th, 2017, 5:45 pm

Thank you for the replies. I don't visit the Lemon Fool as often as I should so I apologise for taking so long to come back. I worked at Woolworths for a number of years as an assistant manager so have some idea of working in retail. I imagine going it alone is so much harder and stressful. I don't think I will ever run a shop. I've just always had a vague notion that I might one day. However, like a lot of other things you can build up a romantic ideal that bears no relation to the reality. I've seen dozens of shops disappear from the high streets and it is very sad. Thank you for taking the time to share your experiences and I wish you the best of luck in whatever you are doing now.

JLOO

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Re: F.A.O midnightcatprowl

#44454

Postby stewamax » April 7th, 2017, 7:41 pm

... the web provides plethora of choice with minimal pricing for anything that can be waited just a few days for.

The threat from many online retailers is not just that they can provide from a vast range at low prices, but that they can deliver not just in a day or two but next morning (or even, in London, within a few hours). And that is without Amazon's drones.
This isn't limited to large retailers: niche ones can provide a similar service if they make the effort. I regularly order tea online from a specialist tea and coffee retailer in Bath. If I order by 16.00 I usually get a delivery next morning. So the result* is not dissimilar from visiting Tesco after work to stock up for tomorrow.

* but not the tea!

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Re: F.A.O midnightcatprowl

#45024

Postby brightncheerful » April 10th, 2017, 2:05 pm

I found midnightcatprowl's sum-up very interesting. To reciprocate, the following (slightly edited) is from the June 2009 issue of my newsletter for clients and contacts (multiple retailers and landlords of shop property):

"I’ve always had an unusually good understanding of retailing as well as property, but my retailing understanding used to come from reading and observation which is like thinking you know all about negotiating rent reviews because you’ve a shop or two. So, to bring myself into the real world, in my spare time, from 2003 to Christmas Eve 2008, I helped my wife, Mrs Bnc, run a shop in X and I’d like you about our experience.

It was my idea: ever since I became an organic wholefood vegetarian in 1984, and involved in the holistic movement, I’d felt the urge to run a health-food shop but, for one reason or another, it remained a dream. When the opportunity arose to have a go, the shop was a Grade I listed building in a mews in the heart of X. Although X’s population is only about 10,000, the retail mix is impressive, including 4 banks, a sub-post office, Tesco, Somerfield, Boots, Greggs; CC opened recently; also a railway station with direct line to London, Birmingham and South Wales; and X is a popular market town for tourists.

For the lease, we took 12 years with an option to break at the 6th year and rent reviews at 3 yearly intervals. I deliberately over agreed the initial rent, so there was no increase at the review. We could’ve paid rent monthly but I opted for quarterly because that would hold us in better stead with the landlord. Mrs Bnc designed the shop. I won’t tell you the source of inspiration in having bespoke shelving, made of pear-wood, except to say it involved multimillionaires which we are not. The effect was such that virtually every customer remarked what a lovely shop (and after we vacated the landlord relet it within days).

Mrs Bnc is an excellent salesperson, but neither of us had experience of actually running a shop, so it was a shock to discover just how much there is to do all the time. And for me, that meant overloading so as to continue with rent reviews, etc for clients. We installed CCTV for security of staff; to a Saturday schoolgirl, we paid £6 an hour (in 2004): about 40% more than she got working in Somerfield. To provide a quality service, we went for EPOS in a limited way. z1 became familiar. No cheques, it was cash and credit cards only and we were possibly the first in X to have chip-and-pin.

We traded as The Rice Cake. I created an information-only web-site. For the launch, I delivered a leaflet to every house in X and we got interviews on BBC local radio. We wanted to sell organic groceries, only what we’d use ourselves or recommend, avoiding items that don’t stand up to scrutiny when you read the small print on the label, but it became obvious our taste was too purist for many customers; we conceded, but so uncomfortable were we with some products that we hid them in a cupboard and only sold them when the customer asked.

There was another health-food shop in X and the locals were partisan. We were co-existing okay, until a 3rd health-food shop, a multiple, opened and our older and poorer customers deserted. (Actually it was me that wrote to them to suggest they open a branch in X: I thought it would put our competitor out-of-business and enable us to have a let-out for our change of direction.) So we changed the name of our shop to Muse Organix, The Skin Care Centre, and started selling organic and natural skin-care products, which suited Mrs Bnc because she has a Cidesco Diploma. It was much more enjoyable to have adult conversations with customers, particularly women choosing their Dr. Hauschka. Of make-up or, as I used to say, face painting for adults, “can I give the impression of being helpful” was my sales-talk.

People shopped from miles around: we could beat supermarkets, department stores, and the Internet on price: we gave 5% off when customers spent at least £10 and 11% discount when £20+. A month before Christmas 2008, we held a private sale for regulars so they could buy the best stuff before the final days bargain-hunting vultures got to hear. A few weeks after we closed voluntarily, the 3rd health-food shop went broke, blaming the economy! Served them right. For us, it was fun, including the rubbish tip every week. I learned a lot, especially how suppliers use packaging regulations to sell direct via the Internet to customers. Nowadays, although I miss not being able to buy at cost price, whenever I go into a skin-care or health-food shop, I’m glad I’m a customer; I imagine they think the same."

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Re: F.A.O midnightcatprowl

#45184

Postby Itsallaguess » April 11th, 2017, 4:53 am

brightncheerful wrote:
We wanted to sell organic groceries, only what we’d use ourselves or recommend, avoiding items that don’t stand up to scrutiny when you read the small print on the label, but it became obvious our taste was too purist for many customers; we conceded, but so uncomfortable were we with some products that we hid them in a cupboard and only sold them when the customer asked.


Ah, that age-old battle between Idealism and Capitalism.....

I think someone missed a trick at the BBC when they decided to re-make Open All Hours.....

They could have updated it for the Tofu-generation and had a new, modern-day Arkwright, who opened and closed the available drawers and cupboards based on his social-assessment of the customer heading towards his door....

:D

Itsallaguess


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